A time capsule of the greatest financial mania in the history of mankind, told in real-time by regular folks and patriots. May future generations better understand the madness of crowds, and how power and money corrupt.

June 22, 2007

Nice to see the U of Michigan economist being honest (go blue). The guy from Texas was a bit too rosy, and ignorant of national issues and bubble causes. But then again, we know another ignorant fool from Texas, don't we.

History will not be kind to cheerleaders, or "experts" who called bottom. Again. And again. And again.

And I wonder if the NAR and Lawrence Yun are pissed they weren't invited as usual. Perhaps the days of the MSM going to the NAR and realtors for "expert opinion" are over?

If you really want to know how much economists know read Nassim Taleb's book "The Black Swan." (They dont know anything. It's not really a new idea.)http://www.amazon.com/Black-Swan-Impact-Highly-Improbable/dp/1400063515

I didn't see any of them saying anything that wasn't reflective of the areas they were reporting on (except the CA guy: HE'S too rosy, IMO).

You all DO realize that real estate is NOT experiencing a bubble NATIONWIDE? Yes, there's monumental price bubbles/bursts in areas like the West Coast, the South (esp. Florida, lesser so Georgia, etc), and some areas along the Eastern Seaboard, up into New England?

However, many parts of the country, including Texas, the Midwest, Northern tier states, etc, have largely been bypassed? Take Texas: Houston has been depressed for years, never recovering from the job loss and recession of the 1980's/1990's. So the real estate there never took off, like it did elsewhere in the Great Housing Bubble of 2000-2006.

So what the guy said about Texas is true: the median price in Texas IS significantly less than elsewhere, and only recently has started taking off. Why? I'm guessing one factor is all the smart people who knew a bubble when they saw one, and sold their over-priced homes in CA, etc, and decided to head for places like Nashville, Austin, etc, where their $$$ goes a lot further.

It's called Californication, and it's not a new trend. Places like CA are exporting not only the population (negative pop. growth in CA for the last 5 years), but as important the housing wealth netted from the sales of the refugees' over-priced homes; however, the booty largely is going to another state/neighborhood to be spent in the local economy there.

In exchange, the CA neighborhood gets a freshly over-extended buyer who probably won't be spending on much, besides their property taxes and ramen. Many of these buyers cannot afford to even add furniture, using lawn furniture instead.

But don't take my word for it.

Here's a nice chart offered by National City, a research firm that provides reports to bankers, etc.

http://tinyurl.com/yr23wb

Scroll your mouse over a town, and you can see their calculations for how over-valued an area is, compared to trend.

In many areas, you can see the peak of the bubble for that area, which was about 3-4 quarters prior to now.

FWIW, the guy who runs the bubblebuster.com site says he's not updating his site as frequently, as he feels the National City site is doing such a good job with theirs.

I think both sites are good, as they show different aspects. But the point is, a dedicated bubble buster supports their data...

Nice to see the U of Michigan economist being honest (go blue). The guy from Texas(a&m) was a bit too rosy, and ignorant of national issues and bubble causes. But then again, we know another ignorant fool from Texas, don't we?